Alpesh Patel's NEWSLETTERPRO – Markets have time to recover today as US is closed for Veteran’s day, the week ahead offers important trading opportunities

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MORNING BRIEF

© Alpesh Patel

The US Dollar finished the week higher against almost all of the other majors, particularly rising versus the Euro and the Yen. The American currency was lifted by speculation about the US economy and whether tapering within 2013 or early in 2014 would be justified. The Non-Farm Payrolls report released on Friday was a strong indicator in favor of early tapering as the US economy added 204k jobs the previous month, surpassing expectations by far. At the same time, developments in Europe with ECB cutting its key interest rate by 0.25% led to further Dollar gains as investors fled their Euro-long positions for safer heavens. As this week starts, we would expect more gains for the American currency as there is a lack of important news announcements to revert the pro-Dollar trend. Today the US markets have a bank holiday celebrating the Veteran’s Day which means that after the European session volume and volatility will drop substantially making for a quiet trading day. Tomorrow however the day will start with key PPI and CPI reports from the European region and these could possibly fuel a retracement rally in the high-beta Euro and Pound currencies.

Nothing major on our calendar as US celebrate Veteran’s Day

Our Economic Calendar is empty of any significant reports during the European session and later on the US and Canada money markets are closed in celebration of the Veteran’s Day. This makes for a very quiet start of the week and we would like to see whether investors will continue on Friday’s tone of pro-Dollar optimism or they would prefer to sit back and wait to find another catalyst to spur a trend.

Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

 

EUR

French Bank Holiday

 

USD

Bank Holiday

 

CAD

Bank Holiday

 

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TECHNICAL ANALYSIS & LEVELS

EUR/USD

Euro remained above the 1.3300 key support line on Friday and hovered around the 1.3350 area for the day. Euro seems to have halted its downtrend for the moment and we don’t expect any major movement today as the lack of any data releases and the bank holidays in the US and Canada point to a quiet and uneventful day of trading. We would like to see how the European currency starts the week and the key levels we’re watching are the 1.3300 support line and the 1.3450 resistance area. Any breach beyond these critical points will show us the way forward but we don’t expect this breakout happening today. Anyhow, should something come up and the breakout occurs our advised targets are on the chart above.

GBP/USD

The Pound broke below 1.6000 on late Friday hours triggering our short entry there and tried to reach for our first target at  1.5945 falling short a few pips. We would like to monitor the Pound this morning to see whether this attempt to test lower levels will be repeated, our stops are placed above the 1.6120 area and we need to wait and let the trade take its course. Due to the late Friday afternoon triggering of the trade and since the currency is now hovering near the breakeven price, we would advise that you take the chance and reduce the trade size at half to avoid excess losses at the start of the week.

FTSE 100

The FTSE 100 reversed higher on Friday closing our remaining 50% of our trade at the breakeven price. We would like to sit on the sidelines now as a new trend needs to be confirmed prior to taking any new trades. The 6,800 points level is a significant point of resistance and should the downtrend continue this level must not be broken.

Gold

Gold continued falling on Friday and went beyond the $1,300 mark reaching as low as the $1,286 price tag. Gold seems to be on an extended downtrend and as it continues to be extremely oversold a trade is not advised. We feel that Gold needs to retrace a bit higher and retest the $1,300 mark that now acts as an important point of resistance. We prefer to sit on the sidelines on this instrument as well and we wouldn’t suggest any trades to you on Gold or any other instruments that we wouldn’t take for ourselves. Patience is required in trading and there will be days like today when no trades will be taken as markets recover from extreme swings. The week ahead of us is promising so take this chance to better prepare yourselves for more trades down the road.

All charts have been created using FXCM’s Trading Station platform.

This is the free, time-delayed version of NewsletterPro, a subscription-based product.

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